Data Check: Faculty salaries and university operating funds are for teaching and research

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New data shows that the decline in business and government support cannot be offset by R&D spending in the higher education sector – and the way Canada counts R&D activity in universities tells us a lot about the activities public funding is intended to support.

While trends in expenditures on research and development (R&D) by business and the federal government have been bleak, there has always been some hope the national R&D enterprise would continue to be buoyed by R&D in the higher education sector (otherwise known as Higher Education Research and Development, or HERD). Unfortunately, as the latest data from Statistics Canada show, even revisions to the estimate of HERD are not enough to compensate for the decline of Federal and business funding.

Increases in higher education spending on R&D will not be enough to offset declining business spending on in 2015. Even with a negative inflation rate, the real growth in total R&D spending will be 0.4 per cent lower than in 2014. * As a percentage of Gross Domestic Product (GDP), the “intensity” of national spending will decline by 1.6 per cent. From 2012, the first year in which the new method of estimation for HERD is applied, the intensity of national spending will decline by 11 per cent.

It is impossible to know how much worse the picture would look if we were to take the most recent high point in 2007 as our starting point, and if real-time adjustments to the method of estimating HERD were in place. But it is a useful reminder that the manner in which university research and faculty salaries are supported in Canada is different from other countries, and commentaries purporting to conduct comparative analyses have to take those factors into account in order to be valid.

HERD estimates in Canada include a coefficient for faculty salaries paid out of university operating funds, based on the estimated proportion of time in their academic work spent on research. In other words, operating funding is not simply for teaching but for scholarly and creative activity, too. Some faculty members are paid out of research or trust funds, or a combination of those and operating funds. The proportion varies even within Canada, but the largest proportion of full-time faculty is paid from operating funding. In other words, they are paid year-round salaries to support the full spectrum of academic activities from teaching to research to service, and the data are reported that way.

* The average forecast rate of the Bank of Canada and Canadian financial institutions is for a decline of 0.3 per cent in the GDP implicit price index in 2015; average real GDP growth is projected to be 1.2 per cent.

Sources: Statistics Canada, Spending on research and development in the higher education sector, 2013/2014; Spending on research and development, 2015 (intentions); Research and development in the higher education sector, 2014/2015; Table 380-0064 Gross domestic product, expenditure-based, quarterly; Table 380-0066 Price indexes, gross domestic product, quarterly.

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